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It can be used for playing really old DOS games like commander keen,Its quite awkward since their is no built in keyboard for the psp,but their is a virtual keyboard in Psp Dosbox
Yes, it's a bit tricky to setup, not for the beginner.
Knowledge of DOS is recommended - but then that may be why you want to run this in the first place!
It's best with games that don't require a keyboard. However, if you happen to have an IR keyboard (like the Universal Palm Keyboard) you can use this with PSP DOSBox and it's just like have a little DOS-based PC. Very nice.